Belmont chronicle. [volume] (St. Clairsville, Ohio) 1855-1973, 1887-02-10
MADE CLEAR AS DAY.
WALL STREETS "PUTs,D CALLS"
SPREADS AND "sTRADDLES."

Mr.. Russell Sage the Inventor of These
Ingenious Speculative Devices-A Con-
hdentisl Clerk Explains Them to an
Inquiring Novice.
Mr. Russell Sage was the pioneer who in
vented ''puts, "calls," spreads" and ''strad-
dies" He began dealing in them when be
first came to Wall street in 1861, after his
withdrawal from congress. and he has been
dealing in them ever since; and the stock
markets of the world have taken up this in
genious speculative device Of Mr. Sage's, and
stock privileges are Just as well known on the
continental bourses to-day and in the London
market as they are here, and they are largely
dealt in. Perhaps not so largely as here, be
cause the device is American and an outcome
of American genius, but transcontinental
SPECTATORS could not fail to see the advant-
ages they offered and have perforcs adopted
them. London declares that the nomencla-
ture, so far as spreads" and Sstraddlss" are
concerned, is not refined, and cal them differ
emily, but what they deal In are American
stock privileges just the same
MADE AS CLEAR AS DAY.
tstraddles'r asked the writer when he first
went down on Wall street.
"Well," said John E. McCann, the conf
Dental clerk of Russell Sage, Of whom the
question was asked, "In tell you if you if
you promise never to mention the poetical
subject again. 1t requires pretty deft word
ing to make the thing clear, so 10 is not an
exhilarating subject to talk ON. You hear
good deal about puts and calls, but 1 ven
ture to say there are 50,O00,000 persons in the
United States who do not know what they
are, nor what the meaning is of the word
privileges Now a privilege is contract by
which the maker of it, Russell Sage, S. V.
Waite, Jay Gould or Harvey Kennedy, en-
cages to purchase from the holder in the one
case, or to sell to the holder in the other case,
a number Of shares Of some specified stock,
at certain price at any time within a GER
tain period at the option of the holder. Got
that's"
@cALL" EXPLAINED.
"A cali is privilege bought Of the maker
at certain price, and the owner of it is priv
ileged to caH for certain amount Of stock at
a given price, within thirty, sixty or ninety
days, four or six months. If a man holds q
put he has the right to deliver to the maker
of the privilege stock at certain agreed on
price within a certain number Of days. Clearf
No. Wei, let's try once more.
Suppose Western Union is selling at 7e A
man wants sixty day put on it at 66, be-
cause he believes the stock is going down He
gives DIR. Sage, Mr. White, Mr. Kennedy OF
Mr. Gould per cent on the amount Of stock
he wants to deal in A hundred shares is
usual, and per cent. is 800. He receives IN
return slip of paper signed by either one or
the other of these gentlemen Then if West
ern Union goes below 66 within sixty days,
he may buy it for whatever it Is selling for
below that price and put it to the maker of
the privilege at the price agreed on, 60, and
receivs check for $1,000. The holder makes
the difference. All, you understand If
telegraph does not go below Sc the holder is
out his S100 The cali business operates s1-
actly in the opposite way. A man buys the
privilege of calling Western Union at Is
when it is selling at 70 If it sells above IS,
you can cah on the maker Of the privilege for
100 shares at 75, and the 100 shares are thus
bought by the holder for 81, 500. and be turns
around and sells it at Sc Il the stock 5
selling there, and pockets the differences"
SPREADS" AND @sTRADDLEs.n
GWhat about spreads and 'straddlesrS
The holder of one may put stock to the
maker of the privilege or cali for if. 'Strad-
dies come high, because there Is money in
them whichever way the market may go. If
the market does not go all, but stands still,
why, the maker is in the money he has been
paid for the privilege, usually about 8 per
cent, or $780, A spread is also put and
and cali combined, but there is this differ
ence, a 'straddle is made at the market
That is to say the maker OF the privilege
takes the risk that the stock in question does
not move to any extent from the price at
which it is selling when the privilege IS sold
In spread the maker has more leeway. II
Western Union is selling at 20, to go back to
the old illustration, the maker of the privi-
lege sells spread, say at 81 and 50. If it
goes below 81, the holder can put the stock
and make the difference, and if il goes above
so, the holder can cali it at that price and
reap the profitR But so long as the price OF
the stock keeps within those points the maker
of the privilege is safe. To put it in another
way, the holder of 'straddle' viii make if
the market for the stock he is dealing in
moves at all The holder Of spread doesn't
make anything until the market moves past
certain limits There is one thing more, the
maker of privilege only receives the money
for which he sells the privilege, while the
holder may make thouSands-or nothing
New York Mail and Express.